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Audit Committee under Section 177 must include:

AMinimum 3 directors with majority being INDEPENDENT directors, and the chairperson + majority must be able to read & understand financial statements
BOnly one independent director
COnly employees
DAt least one shareholder representative
Answer & Solution
Correct answer: B. Only one independent director
1. Section 177 requires audit committee of ≥3 directors, majority independent. 2. Majority including chairperson must understand FS. 3. Composition is critical for committee effectiveness. _Source: ICAI BoS CA Final Paper 3, Ch 5 "Company Audit"_
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